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Unformatted text preview: General Capital Assets; General Long-Term Liabilities; Permanent Funds Chapter 9 GCA & GLTL: What We’ve Seen Thus Far • General Capital Assets (GCA) – Purchases recorded as expenditures rather than fund assets – Sales recorded as Other Financing Sources (OFS) • General Long-Term Liabilities – Issuance of debt recorded as OFS – Retirement of debt recorded as expenditures or Other Financing Uses (OFU) GCA-GLTL Accounting Equation Types of Capital Assets • Land • Land improvements • Easements • Buildings • Building Improvements V e h i c l e s M a c h i Normal GCA Classifications (recommended by GFOA) • Land • Buildings or Buildings & Improvements • Infrastructure • Machinery & Equipment • Construction in Progress • Intangible Assets [added as a result of GASBS 51] Other GCA Issues • Regular GCA inventory • Accounting for additions, betterments, and renewals • Depreciation and accumulated depreciation • Modified approach – Allowed only with infrastructure assets – No depreciation recorded – Only additions / improvements are capitalized • Updating GCA records Initial Valuation of GCA Cost Invoice price + Cost of delivery + Cost to get asset ready for intended use Estimated cost Used when invoice price is unknown Frequent problem for governments with poor inventory records Gifts Fair value + Cost of delivery + Cost to get asset ready for intended use Other Acquisition Methods Foreclosure Lower of (1) amount due for taxes, etc. or (2) appraised value of property Eminent domain Assign value as if it were a negotiated purchase Escheat Same manner as gifts Infrastructure Capital Assets Long lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets include roads, bridges, tunnels, drainage systems, water & sewer systems, dams, & lighting systems. Governments may elect not to depreciate Infrastructure, then it follows the modified Reporting Works of Art & Historical Treasures Governments should capitalize works of art and historical treasures. However, they are not required to capitalize nor depreciate if they are an INEXHAUSTIBLE collection (all 3 criteria met) • Collection is held for public exhibition, education, or research in furtherance of public service rather than financial gain • It is protected, kept unencumbered, cared for, and preserved • It is subject to policy that requires proceeds Reporting GCA in the Financial...
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